Another day, another list of firms hired by clients claiming that Bernard Madoff swindled them out of millions in investments.
In what will probably become among the first of many, New York Law School filed suit in U.S. district court in Manhattan on Tuesday against GMAC Chairman J. Ezra Merkin, his hedge fund Ascot Partners and the fund's auditor, Chicago-based BDO Seidman.
Represented by Stephen Rodd and Nancy Kaboolian of New York's Abbey Spanier Rodd & Abrams -- no surprise, considering that founding partner Arthur Abbey sits on the school's board of trustees -- NYLS claims that a $3 million investment in Ascot made through an endowment entity has been rendered worthless by the Madoff fraud. (NYLS dean and president, Richard Matasar, says the investment was a small piece of the school's $200 million endowment.)
According to the 20-page complaint, plaintiffs accuse Merkin of misleading investors by telling them Ascot was investing in several funds when it really was relying solely on entrusting its assets to Bernard L. Madoff Investment Securities. Ascot's auditor, BDO Seidman, is accused of missing "red flags" at BMIS that would have detected the alleged fraud.
Merkin's lawyers are claiming that he's just as much a Madoff victim.
"Mr. Merkin and his family are personally among the largest victims of the massive fraud confessed by Bernard Madoff," said Dechert securities litigation heavyweight Andrew Levander to Dow Jones Newswires.
"Like the other victims and the entire financial community, Mr. Merkin is shocked by these events," Levander told Dow Jones. "He intends to defend the lawsuit vigorously while seeking redress for himself and his investors from whoever perpetrated this fraud."
Another school also is taking action.
Yeshiva University, a Jewish educational institution with four campuses in New York City, announced in a statement on Tuesday that it had lost $110 million from its endowment fund. The school also said that it had engaged Sullivan & Cromwell, an "internationally renowned and respected" firm "with recognized expertise in corporate and institutional governance" to investigate its legal options.
The Palm Beach Post reports that teams of lawyers were descending on an area particularly stricken by Madoff's alleged Ponzi scheming. The paper reported that Buchanan Ingersoll & Rooney 's Barry Slotnick -- he of New York subway vigilante lore -- flew down to the wealthy enclave from New York on a client's private plane.
"When all is said and done, the gloom and doom with regard to the inability of those that have been defrauded to recoup is just wrong," Slotnick told The Wall Street Journal's Law Blog last night.
"I've been speaking to people in various parts of the world and do believe that there are funds that have to be found and captured, and, necessarily there are techniques that I'm not at liberty to discuss right now that I will employ for my clients."
Slotnick wouldn't disclose the nature of his cryptic "techniques," but The Palm Beach Post reports that he met with one client who claimed Madoff-related losses of $500 million. Slotnick told the paper he expects to depose many individuals in "one of the worst betrayals I've ever heard of."
The paper also reports that Florida firms are wading into the fray.
"I was just talking to someone who said he and 20 buddies each put in $500,000 in a hedge fund that invested with Madoff," said Mark Raymond, the managing partner of the Miami office of Broad and Cassel. "A lot of them are totally thrown for a loop. Whom do you talk to about selling your prized possessions without getting ripped off?"
Additional reporting by Zach Lowe.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.